I warn you not to be old under a Labour government

Prudence was divorced long ago by the government, as we can see from the state of the public finances.

Now Prudence is to be penalised and punished,

If you have saved, you will be offered practically no interest on your savings.

If you have saved through a pension fund, it now has to pay tax on the dividends.

If you are in a final salary pension scheme, you may find tax and regulation are squeezing it to death. You may no longer be able to add additional years service to your pension.

And to cap it all, we learned yesterday that the next plan might be a further tax on the prudent to pay for the costs of those who need residential care later in life.

The message from the government is clear. Spend all you can today, and rely on the state tomorrow. I warn you. Do not be prudent under this government, and do not grow old.

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20 Comments

  1. Kevin Lohse
    Posted July 15, 2009 at 6:49 am | Permalink

    Dear John,
    Very good. May I also add, Do not be a net tax payer. Do not dare to pay for your children to receive the best education you can afford. Do not expect to live in a free society.

    • Robert Pay
      Posted July 15, 2009 at 10:59 pm | Permalink

      We should not be so pessimistic about the future.

      If you work in the public sector you can expect a guaranteed pension, to which you make no contribution, indexed linked for life. For every £1 private indivduals save for their own pension we have a liability of £1 for public sector workers. Yet we are capped on what we can save while the PM has a pension pot worth £3million for ruining the public finances!

      I would cap all public sector pensions at £60k per annum – the equivalent of what I am allowed to save into a pension fund from my own income.

      PS There will be no change because MP’s have the same system and the Tories have refused to engage over public finances for fear of the cry of “cuts”!

      Reply: Not so. The MP Pension scheme requires contributions from members, and is currently considering how to cut benefits to cut the costs. The Conservatives have made clear that the deficit has to be brought down by reducing wasteful and undesirable spending.

  2. Mike Stallard
    Posted July 15, 2009 at 6:54 am | Permalink

    I AM old under a Labour government!
    What happens when (and if) I go blind? Or break my pelvis? Or have to lift my wife when I am dying of cancer?
    Well, I still have a family, although it has now emigrated round the world, so that’s not much use.
    I can sell my house, except that I don’t own it.
    I can go into a home that stinks of urine and which is run by a woman who knows everything about everything and tells you so in a very LOUD VOICE.
    But, Comrades!, remember that Our Glorious Leaders have our best interests at heart as they luxuriate in one of their many large houses with their every wish immediately satisfied by their (immigrant) Servants.

  3. Chris H
    Posted July 15, 2009 at 7:07 am | Permalink

    I showed the news article to my husband last night; he was dumbfounded at the prospect of yet more taxation on our already very modest (future) pensions, or the thought of having to fork out for care insurance just at the point of retirement. We already do not have private medical insurance because we just can’t afford it on top of our current outgoings (which are themselves modest by modern standards).

    And what happens if we don’t actually require 24/7 care in our old age? Presumably we forfeit that money, just like every other form of taxation. I notice there was an option or suggestion to have payments taken out of one’s estate after death….fine, I’ll just spend everything I’ve got and ensure my estate doesnt have enough money left in it.
    We are all aware that the population is aging, but there surely must be a better way of dealing with the financial aspect of it? After all, the assumption that everyone over 65 is going to wind up in a wheelchair or a care-home is rather ridiculous. Private care homes charge, I believe, something like £1000 a week (?)….is this huge sum really justified? Couldnt the costs be scrutinised to see what exactly people are getting for their money? This is part of the problem.

    • Not Old Yet
      Posted July 15, 2009 at 10:56 am | Permalink

      “is this huge sum really justified” – given the increasing regulation of business and social care then it possibly is justified. Rember the current administration just keeps on rasing the cost of any private enterprise …. minimum wage, increased business rates, red tape, ‘equality’ legislation, ’employment’ legislation, …

      The inequalities between citizens does not just come down to whether or not you pay your own care home fees, it is entrenched in the way that social services operate. If social services are paying the bill, the ‘patient’ is assessed and a care plan prepared and submitted to the care home as part of the contract for the patient’s care. If you are paying your own fees, social services will still perform an assessment, but they do not provide a care plan. So guess what … you are subject to the vagaries of what the care home may choose to deliver and you are almost certainly subsidising the places ‘funded’ through social services.

      Just another example of positive discrimination agains those who have been prudent during their working lives!

  4. Mick Anderson
    Posted July 15, 2009 at 7:24 am | Permalink

    Government seems to be talking about a £20,000 retirement tax to pay for an individuals care in old age.

    As a proportion of the tax take from the average individual over their working life, this is quite a small percentage. If an individual averages £3600 annually paid in direct taxation for a working life of 40 years (using equivalence to compensate for changes in average wage, inflation, &ct), that gives £144,000 paid in tax. So £20k represents about 14% extra, even if you assume that indirect taxation does not exist (if only!).

    Does anybody here believe that there is less than 14% waste that can be trimmed from Government expenditure to pay for this proposal?

    • jean baker
      Posted July 15, 2009 at 9:24 am | Permalink

      Britain’s vulnerable, elderly paid, via taxes, for healthcare provision for life including care in their old age. Nulabor has systematically demolished Social Services managed community homes, converting the plight of the elderly into a vastly more expensive care package yielding lucrative profits for the directors/shareholders of care providers.

      Prudent elderly people are already paying twice under the taxpayer funded ‘PFI Care Plan’ – Nulabor seizes property assets to bolster profits having squandered contributions via taxation.
      Cheap immigrant labour is favoured over and above highly/fully qualified British care workers.

      It’s desperately important that our elderly are returned to local ‘non profit focussed’ homes run by local Councils – cheaper for taxpayers and elderly residents.

  5. Brian Tomkinson
    Posted July 15, 2009 at 8:11 am | Permalink

    Very well put. This is just another way to take money from the prudent. The feckless and spendthrifts can have what they like paid for by the prudent. Is a Conservative government going to end this? Since it has pertained throughout my lifetime I am not confident.
    The issue of the “ageing population” which seems to have suddenly dawned on government and politicians has been known about for over sixty years – or hasn’t government the intelligence to realise what is the logical conclusion of a baby boom?

    • Mark M
      Posted July 15, 2009 at 9:48 am | Permalink

      They haven’t even got the intelligence to realise the logical conclusion of higher taxes on productive behaviour. I notice from Guido that McDonalds has moved its HQ to Switzerland to avoid our corporation tax.

      It’s funny. Government understands the principle of taxation to discourage smoking and drinking but isn’t quite able to make the leap of thought required to understand that high taxes also discourage entrepreneurship.

  6. Paul
    Posted July 15, 2009 at 9:22 am | Permalink

    Actually being middle aged or young under a Labour government isn’t much fun either. If you’ve just been born under a Labour government, then you have a life time of work in front of you to pay for all the politically correct intiatives and nonsense foisted on the working people of this country during the last 12 years

  7. figurewizard
    Posted July 15, 2009 at 10:20 am | Permalink

    It was the Labour government of 1945 that implemented the Beveridge Plan, ushering in the welfare state. Of all the measures introduced by Labour in its long history it is this that they rightly regard with the greatest pride.

    Three of its central tenets were that it should be ‘contributory’ (national insurance), ‘comprehensive’ and ‘adequate.’ When introduced its declared objective was to look after those people who needed help from the cradle to the grave if needs be.

    Today’s Labour party have trashed this radical committment to the oldest and most vulnerable in society. In their case they have hung on to the ‘contributory’ bit and discarded the rest, despite the fact that today’s elderly have been paying for it all of their working lives. This is not just a betrayal of such people but of a keystone of Labour’s raison d’etre.

    Nor should the indefensible and still not fully addressed tax hike on the lowest earners in this country be forgotten. It was introduced by Gordon Brown when he scrapped the 10P tax band so as to fund a tax cut for the better off in order to win the election that never was. So today the question arises – Exactly what is the point of anyone voting for the Labour party?

  8. FatBigot
    Posted July 15, 2009 at 11:01 am | Permalink

    There’s no avoiding the fact that the cost of caring for the elderly has been increasing steadily for some time and looks likely to increase further. It has to be paid for somehow and, as we know, there is simply no money in the pot.

    I hate to admit it, but I believe the government has got this issue right. They are not blundering in with an ill-considered conclusion to be forced on the Commons but are opening a debate about whether, and if so how, specific charges should be levied to pay for such care.

    Of course governments of both parties should have been building a reserve fund for the last 60 years through the National Insurance scheme, but they didn’t and we are where we are. This issue is both important and expensive, it is better for it to be out in the open and discussed. Someone has to pay for it, the issues are who and how?

    • jean baker
      Posted July 15, 2009 at 3:01 pm | Permalink

      Private care of the elderly providers receive around 25% more per bed per person – occupied or empty.

      Localized care in homes managed by Social Services was the cheapest and best care available.

  9. Steve Cox
    Posted July 15, 2009 at 12:06 pm | Permalink

    Maybe I’m cynical, but it seems to me that if the greedy sods in Whitehall, sorry I mean our democratically elected government, can legally extract twenty grand from anyone over the age of eighteen who can afford to pay it, that would go a very long way towards sorting out the current budget deficit. Costs would only arise slowly over the coming years, so Brown Gordon could continue merrily spending whatever takes his fancy.

    It’s another cheap government con-trick that needs to be booted into touch ASAP. I strongly suggest to everyone that you should make your own provisions for your dotage, and not rely on the British government, which has been demonstrated to have less compassion for the elderly than it does for flea-ridden foxes. After all, it was M. Thatcher’s lot who removed the indexation of state pensions to earnings, so be it Labour or Tory next June, we ageing folk with some savings put by will still be stuffed either way, I suspect. Or can you reassure me otherwise, John?

  10. alan jutson
    Posted July 15, 2009 at 4:31 pm | Permalink

    John

    The problem is not the care offered in Nursing Homes, If you do due dilligence before you choose, as there are good ones that exist.

    The problem is who, and how do we pay for them.

    Should those who have spent all of their money enjoying life to the full on a day – day basis, get the same benefits of care at no cost to them, as those who have made an attempt, some at considerable financial sacrifice, to be a little more cautious.

    There is no doubt that there does come a time, when it is impossible to give someone proper care in their own Home, and as such a Nursing Home is a sensible option for many reasons.

    Clearly we need an adult debate about who pays and how much. It would be nice if we could have a proper cross Party grown up discussion and agreement on this subject for once.

    The problem now is that the General Public do not trust Politicians to be honest any more, and to stick by the rules agreed, as the rules have a habit of changing, always it seems for the worse. Just look at Pension provision for a start, or the post code lottery on health treatment, drugs, and now Education.

    So even if we were to agree an amount of payment this year, for full care in our lifetime, it is most likely that this would change in a few years when more money would be requested, or the care originally agreed to would be limited.

    This is not a subject for Party thoughts, which incidentally neither should Education, the Police or the NHS be, as all of these should be above Political games.

    Will anyone in charge be brave enough to listen and take sensible action, that is the real question.

    I speak as a person who has a 95 year old mother who is in desperate health resident, in to date, an excellent Private Nursing Home.

  11. Adrian Peirson
    Posted July 15, 2009 at 8:01 pm | Permalink

    This is not going to be a problem Mr Redwood, the Corporate Fascist New World Order has everything in hand, why do you think they are discussing Euthenasia at every opportunity.
    In the New world Order, once someone is of no further use to to our Lords and Masters, we will be be pursuaded to do the right thing by society and the Planet.
    I don’t know if we will go the whole way towards a ‘Solylent Green’ Scenario but, I wouldnt put anything past them.
    It’s all a question of how they spin it to the Masses.

    http://www.youtube.com/watch?v=OcrfaWzREVM

  12. Adrian Peirson
    Posted July 15, 2009 at 8:42 pm | Permalink

    This is Communist Ideology, they desire TOTAL Control, they cannot have total control if we are independant, IE if we have money and possesions.
    This is why the Communists killed off the independant farmers in the USSR, they had too, farmers produced goods that meant they could trade for anything else they want.
    Communism is not about redistribution, it is about TOTAL and ABSOLUTE life and death control over everyone.
    This is why we are being brough to our knees, this is why they want us dependant on Govt.
    This is why they Put Flouride in the Water and Mercury in Vaccines.
    This is why they are dumbing down our education system/

    In the 1930’s Autism was unheard of, in 1918 it was 1 in 1500. today it’s one in 166.

    They, our ruling elites are making us dependant on them, this is why our economy and country are being gutted, they do not want us as individuals or as a nation to be independant of their New world Order.

    http://www.youtube.com/watch?v=OT-OKs09oaU

    http://www.youtube.com/results?search_query=kennedy+autism+mercury&search_type=&aq=f

  13. sm
    Posted July 15, 2009 at 10:00 pm | Permalink

    NI is tax – not insurance as the name implies.
    The social insurance aspect has been replaced by MEANS tested benefits, which naturally result in huge bureaucracy.

    Means testing and very poor contributory benefits e.g. JSA £60 pw for 6 months is rather poor insurance on VFM compared with the premium NI at 12%. Particularly when vacancies are low and will take a while to recover.

    Labour truly have forgotten its social insurance for the working man and replaced it with a dependancy trap.

    No tax refunds against prior tax paid in previous years for individuals, when income hits zero. What good is a tax free allowance when you have no income from nowhere. This can happen if you are depleting savings.

    It seems only companies & banks get that treatment.

    This contrasts of course with the tax free benefits MP’s bestow upon themselves. Some waiting for their 80 day holiday and regular cheques with parachutes attached.

    MP’s salary needs to linked to average earnings or benefits and pensions linked to long term economy GDP.

  14. Jon
    Posted July 16, 2009 at 8:01 pm | Permalink

    John, if the Tory’s don’t get the state of our pensions and long term care costs in an ageing population across to the public before the election I think they might pay the price. I want this out in its entire naked horrible truth before the next election. The Tory’s will need not just the mandate but the public support to withstand the prolonged strikes in the public sector that will come. Time is running out.

    That said thank you for raising this issue again.

  15. Myles
    Posted July 17, 2009 at 1:15 pm | Permalink

    Mr Redwood,

    From your article can I infer that the next Conservative government will reverse Brown’s annual £5bn raid on pension funds?

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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